On July 25, 2018 On July 25, 2018 OncBioMune Pharmaceuticals, Inc. reported that it has entered into a securities purchase agreement (the "Purchase Agreement") with an institutional investor for the sale of a convertible note in the aggregate principal amount of $150,000 (the "Note") (Filing, 8-K, Oncbiomune, JUL 25, 2018, View Source [SID1234528398]). The Note bears interest at 8% per year and will mature on the one year anniversary of the date of issue. The Note is convertible into common stock at a 25% discount to the average of the closing prices of the common stock for the prior five trading days including the date upon which a notice of conversion is received by the Company or its transfer agent. The holder will not have the right to convert any portion of its Note if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to its conversion.
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The Note may be prepaid at the Company’s option at a 105% premium between 30 days and 180 days after issuance, and at a 110% premium between 180 days after issuance and the maturity date. Upon certain events, the holder may redeem the note for 125% of the principal plus accrued but unpaid interest. The Note also includes certain penalties upon the occurrence of an event of default, including an increase in the principal and reduction in the conversion rate, as further described in the Note. The Company agreed to use its best efforts to file a proxy statement and take all necessary corporate actions in order to obtain shareholder approval to increase its authorized shares of common stock or effect a reverse split to allow for reserving sufficient shares of common stock to allow full conversion of the Note.
The foregoing description of the Purchase Agreement and Note is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement and Note, copies of which are filed as Exhibits 10.1 and 10.2, respectively, to this report and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Information concerning the Company’s issuance of the Note as set forth in Item 1.01 above is incorporated herein to this Item 2.03 by this reference.
Item 3.02 Unregistered Sales of Equity Securities
Information concerning the Company’s issuance of the Note as set forth in Item 1.01 above is incorporated herein to this Item 3.02 by this reference.
The Note and shares of common stock underlying the Note are not registered under the Securities Act of the 1933, as amended (the "Securities Act"), or any state securities laws. The Company has relied on the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder. In connection with the holder’s execution of the Purchase Agreement, the holder represented to the Company that it is an "accredited investor" as defined in Regulation D of the Securities Act and that the securities being purchased by it are being acquired solely for their its own account and for investment purposes and not with a view to the future sale or distribution.